Companies Still Cheating Workers Out of Overtime Pay

For Taco Bell, Wal-Mart, and other companies, unpaid overtime is just business as usual

by Leora Broydo

| January-February 1999

Imagine having to spend your waking hours slinging ground beef for Taco Bell. The grease, the humiliating uniforms, the menu items with silly names like "Gordita," that Yoda-like spokesmutt. "Yo quiero Taco Bell?" I don't think so. But at the very least there would be solace in the fact that, at the end of the day, you'd have your paycheck, right? Try again, señor.

When it comes to compensation, Taco Bell hasn't always delivered the whole enchilada. Last year a jury in Washington state found that the company cheated as many as 13,000 employees—mostly minimum-wage earners—out of overtime pay. Some of the bandito-like practices included managers forcing workers to wait until restaurants got busy before punching in, making them work after punching out, and failing to document hours. One witness testified that for months she worked 70-80 hours a week, but was only paid for 40. Surely even the Chihuahua gets better treatment than that.

But Taco Bell is by no means the only company in hot sauce over unpaid overtime. "There is mounting evidence of a disturbingly widespread trend: The refusal to pay overtime is becoming standard, if unwritten, policy at a number of large corporations," writes Marjorie Kelly in Business Ethics (July/Aug. 1998). In the past few years, scores of companies, from Wal-Mart to Food Lion, have been forced to fork over millions in previously denied overtime.

Just how much are workers being cheated? The U.S. Labor Department, due to "limited resources," doesn't have comprehensive figures on unpaid overtime. But the Employment Policy Foundation (EPF), a conservative D.C.-based think tank, has estimated that employees lose around $19 billion annually. And the EPF number falls short, according to some researchers.

-Advertisement-

A convergence of elements, Kelly notes, has created a business climate especially ripe for overtime violations. There's the furious pressure companies face to exceed, or at the very least meet, Wall Street expectations. Then there's the fear employees have of being fired or "downsized." Factor in the paltry number of Labor Department investigators—just 950 nationwide—and the fact that workers have less union representation today, and you have an "invitation to illegality," as Kelly puts it. "You have employers with a strong incentive to short-change employees," she observes, "and employees with a strong incentive to keep their mouths shut."

And the problem of unpaid overtime may sooner be compounded than solved. Corporations and legislators last year teamed up in an effort to revamp the Depression-era Fair Labor Standards Act of 1938, the landmark law that established the 40-hour work week and the requirement that employers pay time and a half for overtime. The effort resulted in two Republican-authored bills in Congress last year—the Working Families Flexibility Act and the Family Friendly Workplace Act—that would allow employers to offer workers the option of taking comp time as payment for overtime. The bills' supporters believed the comp-time option would give employers and employees some badly needed flexibility.

Critics viewed this effort as yet another assault on low-wage earners. "Their bills would allow employers to structure schedules with an eye toward getting maximum work at minimum pay out of their employees," wrote John Nichols in The Progressive (April 1997). "Employers could squeeze in 50, 60, even 70 hours a week from their workers without paying them overtime." Karen Nussbaum, who heads the Working Women's Department of the AFL-CIO, told The Progressive the proposals would lead to situations where workers are pressured to accept comp time rather than overtime. "I'm not arguing that there aren't some good employers out there who wouldn't abuse this," Nussbaum said. "But we know that there are already millions of workers employed by companies that don't obey labor laws. Can you imagine how bad things would be if the employers knew they had an option that would allow them to legally avoid paying overtime?"

Both bills died before November's election, and though critics gleefully applauded their demise, some concede that, given some constraints, the comp time for overtime idea could work. "Within the context of a strictly enforced 40-hour week—or perhaps a shorter 36-hour or even 32-hour week, as some European nations are now considering—some scholars and union activists say comp time might be an attractive option," wrote Nichols. "Comp time really is good for personal business that people don't have the time to take off for—things like going to your child's school play," said Debbie Schneider of the Service Employees International Union. "These bills don't do it for us, but I think we have to keep the comp-time option open."

When you're working 80 hours a week on a taco assembly line, and getting paid for just 40, every option is worth considering, hot or mild.